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NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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The Advisors’ Inner Circle Fund II
(the “Trust”) is organized as a Massachusetts business trust under an Amended and Restated Agreement and Declaration of Trust dated
July 24, 1992. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company with 35 funds. The financial statements herein are those of the GRT Value Fund, a diversified fund (the
“Fund”). The financial statements of the remaining funds within the Trust are presented separately. The investment objective of the Fund is capital appreciation. The Fund invests primarily in publicly traded equity securities of companies
that are believed to be selling at a market price below their true value and offer the potential to increase in value. The assets of each fund of the Trust are segregated, and a shareholder’s interest is limited to the fund of the Trust in
which shares are held.
|
2.
|
Significant Accounting Policies:
|
The following is a summary of the significant accounting policies followed by the Fund:
Use of Estimates
— The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to
make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from those estimates.
Security
Valuation
— Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are
valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if there is no such reported sale, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official
Closing Price will be used. Values of debt securities are generally reported at the last sales price if the security is actively traded. If a debt security is not actively traded it is valued at an evaluated bid price by employing methodologies that
utilize actual market transactions, broker-supplied valuations, or
14
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which
approximates market value. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates.
Securities for which market prices are not “readily available” are valued in accordance with Fair Value Procedures established by the Trust’s Board of Trustees (the
“Board”). The Trust’s Fair Value Procedures are implemented through a Fair Value Committee (the “Committee”) designated by the Board. Some of the more common reasons that may necessitate that a security be valued using Fair
Value Procedures include: the security’s trading has been halted or suspended; the security has been de-listed from a national exchange; the security’s primary trading market is temporarily closed at a time when under normal conditions it
would be open; the security has not been traded for an extended period of time; the security’s primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government-imposed restrictions.
When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. As of January 31, 2013, the total market
value of securities in the Fund valued in accordance with Fair Value Procedures was $122,100 or 0.1% of net assets.
In
accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Fund discloses fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The
objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are
described below:
• Level 1 — Unadjusted quoted prices in active markets for identical,
unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;
15
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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• Level 2 — Quoted prices
which are not active, or inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and
• Level 3 — Prices, inputs or exotic modeling techniques which are both significant to the fair value measurement and unobservable (supported by little or no market
activity).
Investments are classified within the level of the lowest significant input considered in determining fair value.
Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement. For details of investment classifications, reference the
schedule of investments.
For the six months ended January 31, 2013, there have been no significant changes to the
Trust’s fair value methodology.
Federal Income Taxes
— It is the Fund’s intention to continue
to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and to distribute all of its taxable income. Accordingly, no provision for Federal income taxes has been made in the financial statements.
The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether
it is “more-likely-than-not” (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the
more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Fund did not record any tax provision in the current period. However, management’s conclusions regarding tax positions taken may be subject to
review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities (i.e., the last 3 tax year ends, as applicable), ongoing analysis of and changes to tax laws, regulations and interpretations
thereof.
As of and during the period six months January 31, 2013, the Fund did not have a tax liability for any
unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the period the Fund did not incur any significant interest or penalties.
Security Transactions and Investment Income
— Security transactions are accounted for on trade date for
financial reporting purposes. Costs used in determining realized gains and losses on the sales of investment securities are
16
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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based on specific identifications. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis, and includes the amortization of premiums and the
accretion of discounts.
Foreign Currency Translation
— The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars on the date of valuation. The Fund does not isolate that portion of realized or unrealized gains and losses
resulting from changes in the foreign exchange rate from fluctuations arising from changes in the market prices of the securities. These gains and losses are included in net realized and unrealized gains and losses on investments on the Statement of
Operations. Net realized and unrealized gains and losses on foreign currency transactions represent net foreign exchange gains or losses from foreign currency exchange contracts, disposition of foreign currencies, currency gains or losses realized
between trade and settlement dates on securities transactions and the difference between the amount of the investment income and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or
paid.
Master Limited Partnerships
— Entities commonly referred to as “MLPs” are generally
organized under state law as limited partnerships or limited liability companies. The Fund intends to primarily invest in MLPs receiving partnership taxation treatment under the Internal Revenue Code of 1986 (the “Code”), and whose
interests or “units” are traded on securities exchanges like shares of corporate stock. To be treated as a partnership for U.S. federal income tax purposes, an MLP whose units are traded on a securities exchange must receive at least 90%
of its income from qualifying sources such as interest, dividends, real estate rents, gain from the sale or disposition of real property, income and gain from mineral or natural resources activities, income and gain from the transportation or
storage of certain fuels, and, in certain circumstances, income and gain from commodities or futures, forwards and options with respect to commodities. Mineral or natural resources activities include exploration, development, production, processing,
mining, refining, marketing and transportation (including pipelines) of oil and gas, minerals, geothermal energy, fertilizer, timber or industrial source carbon dioxide. An MLP consists of a general partner and limited partners (or in the case of
MLPs organized as limited liability companies, a managing member and members). The general partner or managing member typically controls the operations and management of the MLP and has an ownership stake in the partnership. The limited partners or
members, through their ownership of
17
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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limited partner or member interests, provide capital to the entity, are intended to have no role in the operation and management of the entity and receive cash distributions. The MLPs themselves
generally do not pay U.S. federal income taxes. Thus, unlike investors in corporate securities, direct MLP investors are generally not subject to double taxation (i.e., corporate level tax and tax on corporate dividends). Currently, most MLPs
operate in the energy and/or natural resources sector.
Expenses
— Most expenses of the Trust can be
directly attributed to a particular fund. Expenses that cannot be directly attributed to a fund are apportioned among the funds of the Trust based on the number of funds and/or relative net assets.
Dividends and Distributions to Shareholders
— Dividends from net investment income, if any, are declared and paid at
least annually by the Fund. Any net realized capital gains are distributed to shareholders at least annually.
Redemption
Fees
— The Fund retains a redemption fee of 2% on redemption of capital shares held less than fourteen days. For the six months ended January 31, 2013 and the year ended July 31, 2012, the Fund retained $868 and $15,884 in
redemption fees, respectively.
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3.
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Transactions with Affiliates:
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Certain officers and a trustee of the Trust are also officers of SEI Investments Global Funds Services (the “Administrator”), a wholly owned subsidiary of SEI Investments
Company, and/or SEI Investments Distribution Co. (the “Distributor”). Such officers and trustee are paid no fees by the Trust for serving as officers of the Trust.
The services provided by the Chief Compliance Officer (“CCO”) and his staff, whom are employees of the Administrator, are paid for by the Trust as incurred.
The services include regulatory oversight of the Trust’s advisers and service providers as required by SEC regulations. The
CCO’s services have been approved by and are reviewed by the Board.
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4.
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Administration, Distribution, Transfer Agent and Custodian Agreements:
|
The GRT Value Fund and the GRT Absolute Return Fund (the “Funds”) and the Administrator are parties to an Administration Agreement under which
18
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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the Administrator provides management and administrative services to the Funds at an annual rate of:
0.12% on the first $250 million of the Funds’ average daily net assets;
0.10% on the next $250 million of the Funds’ average daily net assets; and
0.08% on the Funds’ average daily net assets over $500 million.
The Funds are subject to a minimum annual administration fee of $190,000, which is allocated among the Funds based on relative net assets. There is also a minimum annual administration fee
of $15,000 per additional class.
The Trust and Distributor are parties to a Distribution Agreement dated May 31, 2000, as
amended and restated on November 16, 2004. The Trust has adopted a distribution plan (the “Plan”) that allows the Trust to pay distribution and service fees for the sale and distribution of its shares and for services provided to
shareholders. The Plan provides for payment of fees to the Distributor at an annual rate of 0.25% of the Fund’s average daily net assets.
DST Systems, Inc. serves as the transfer agent and dividend disbursing agent for the Fund under a transfer agency agreement with the Trust. The Fund may earn cash management credits which
can be used to offset transfer agent expenses. During the six months ended January 31, 2013, the Fund earned $100 of cash management credits. This amount is listed as “Fees Paid Indirectly” on the Statement of Operations.
Union Bank, N.A. acts as custodian (the “Custodian”) for the Fund. The Custodian plays no role in determining the investment
policies of the Fund or which securities are to be purchased or sold by the Fund.
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5.
|
Investment Advisory Agreement:
|
Under the terms of an investment advisory agreement, GRT Capital Partners, L.L.C. (the “Adviser”), provides investment advisory services to the Fund at a fee, which is calculated
daily and paid monthly at an annual rate of 0.95% of the Fund’s average daily net assets. The Adviser has voluntarily agreed to waive a portion of its advisory fees and to assume expenses, if necessary, in order to keep the Fund’s total
annual operating expenses (excluding interest, dividend expenses, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses) from exceeding 1.30% of the Fund’s average daily net assets. The Adviser may discontinue
the expense limitation at any time. In addition, if at any point it becomes unnecessary for the Adviser to reduce fees or make expense reimbursements, the Adviser may retain
19
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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the difference between the “Total Annual Fund Operating Expenses” and 1.30% to recapture all or a portion of its prior fee reductions or expense reimbursements made during the preceding
three-year period. As of January 31, 2013, fees which were previously waived and reimbursed by the Adviser which may be subject possible future reimbursement to the Adviser were $259,148, expiring in 2014, $329,251, expiring in 2015, and
$396,503, expiring in 2016. As of January 31, 2013 there has been no recoupment of previously waived and reimbursed fees.
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6.
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Investment Transactions:
|
The cost of security purchases and the proceeds from security sales, other than long-term U.S. Government and short-term investments were $14,483,127 and $21,603,162, respectively, for the
six months ended January 31, 2013. There were no purchases or sales of long-term U.S. Government securities.
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7.
|
Federal Tax Information:
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The amount and character of income and capital gain distributions, if any, to be paid are determined in accordance with Federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. These book/tax differences may
be temporary or permanent. To the extent these differences are permanent in nature, they are charged or credited to undistributed net investment income (loss), accumulated net realized gain (loss) or paid-in capital, as appropriate, in the period
that the differences arise.
The tax character of dividends and distributions declared during the last two fiscal years was as
follows:
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Ordinary
Income
|
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Long-Term
Capital Gain
|
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Total
|
|
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2012
|
|
$
|
316,245
|
|
|
$
|
2,493,650
|
|
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$
|
2,809,895
|
|
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2011
|
|
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299,890
|
|
|
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—
|
|
|
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299,890
|
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20
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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As of July 31, 2012, the components of Distributable
Earnings on a tax basis were as follows:
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|
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Post October Capital Losses
|
|
$
|
(2,609,690
|
)
|
|
Unrealized Appreciation/(Depreciation)
|
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12,340,714
|
|
|
Other Temporary Differences
|
|
|
(3
|
)
|
|
|
|
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Total
|
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$
|
9,731,021
|
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Post-October losses represents losses realized on investment transactions from November 1, 2011
through January 31, 2013, that, in accordance with Federal income tax regulations, the Fund defers and treats as having arisen in the following fiscal year.
The Federal tax cost and aggregate gross unrealized appreciation and depreciation on investments held by the Fund at January 31, 2013 were as follows:
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Federal
Tax Cost
|
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|
Aggregate
Gross
Unrealized
Appreciation
|
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|
Aggregate
Gross
Unrealized
Depreciation
|
|
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Net Unrealized
Appreciation
|
|
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$
|
79,185,157
|
|
|
$
|
26,223,115
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|
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$
|
(1,105,806
|
)
|
|
$
|
25,117,309
|
|
At January 31, 2013, 40% of total shares outstanding were held by two record shareholders owning 10% or greater of the aggregate
total shares outstanding. In the normal course of business, the Fund enters into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against the
Fund and, therefore, cannot be established; however, based on experience, the risk of loss is remote.
The Fund has entered into an agreement which enables it to participate in a line of credit with the Custodian. The Fund participates in a $6 million uncommitted, senior secured line of
credit, which has an expiration date of January 31, 2014. The proceeds from the borrowings shall be used to provide temporary liquidity to the Fund as necessary in order to meet redemption needs. Interest is charged to the Fund based on the
outstanding principal balance of the borrowings at an annual rate equal to the Custodian’s then-current prime-lending rate. As of and during the six months ended January 31, 2013, the Fund did not use its line of credit.
21
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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10. Recent Accounting Pronouncement:
|
|
In
December 2011, the Financial Accounting Standards Board (“FASB”) issued a further update to the guidance “
Balance Sheet — Disclosures about Offsetting Assets and Liabilities
”. The amendments to this standard require
an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amended guidance is effective for interim and
annual reporting periods beginning after January 1, 2013. At this time, management is evaluating the implications of this update and its impact on the financial statements has not been determined.
The Fund
has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued. Based on this evaluation, no additional disclosures or adjustments were required to the financial
statements.
22
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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DISCLOSURE OF FUND EXPENSES
(Unaudited)
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All mutual funds have operating expenses. As a shareholder of a mutual fund, your investment is affected by
these ongoing costs, which include (among others) costs for portfolio management, administrative services, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns.
Operating expenses such as these are deducted from a mutual fund’s gross income and directly reduce its final investment return.
These expenses are expressed as a percentage of a mutual fund’s average net assets; this percentage is known as a mutual fund’s expense ratio.
The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those of other
mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The table on the following page illustrates your Fund’s costs in two ways.
• Actual Fund Return.
This section helps you to estimate the actual expenses after fee waivers that your Fund incurred over the period. The “Expenses Paid
During Period” column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the “Ending Account Value” number is derived from deducting that expense cost from the Fund’s gross investment return.
You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over
that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under “Expenses Paid During
Period.”
•
Hypothetical 5% Return.
This section helps you compare your Fund’s costs with
those of other mutual funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and
Exchange Commission requires all mutual funds to make this 5% calculation. You can assess your Fund’s comparative cost by comparing the hypothetical result for your Fund in the “Expenses Paid During Period” column with those that
appear in the same charts in the shareholder reports for other mutual funds.
23
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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DISCLOSURE OF FUND EXPENSES
(Unaudited) (Concluded)
|
Note: Because the hypothetical return is set at 5% for
comparison purposes — NOT your Fund’s actual return — the account values shown may not apply to your specific investment.
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Beginning
Account
Value
08/01/12
|
|
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Ending
Account
Value
01/31/13
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|
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Annualized
Expense
Ratios
|
|
|
Expenses
Paid
During
Period*
|
|
|
Actual Fund Return
|
|
$
|
1,000.00
|
|
|
$
|
1,154.40
|
|
|
|
1.30
|
%
|
|
$
|
7.06
|
|
|
Hypothetical 5% Return
|
|
|
1,000.00
|
|
|
|
1,018.60
|
|
|
|
1.30
|
|
|
|
6.61
|
|
|
*Expenses
|
are equal to the Fund’s annualized expense ratio multiplied by the average account value or the period, multiplied by 184/365 (to reflect the
one-half year period).
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24
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
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APPROVAL OF INVESTMENT ADVISORY AGREEMENT
(Unaudited)
|
Board Considerations in Re-Approving the Advisory
Agreement
Pursuant to Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Board of
Trustees (the “Board”) of The Advisors’ Inner Circle Fund II (the “Trust”) must annually review and re-approve the existing Advisory Agreement after its initial two-year term: (i) by the vote of the Trustees or by a
vote of the shareholders of the Fund; and (ii) by the vote of a majority of the Trustees who are not parties to the Advisory Agreement or “interested persons” of any party thereto, as defined in the 1940 Act (the “Independent
Trustees”), cast in person at a meeting called for the purpose of voting on such approval. Each year, the Board calls and holds a meeting to decide whether to renew the Advisory Agreement for an additional one-year term. In preparation for the
meeting, the Board requests and reviews a wide variety of information from the Adviser. The Trustees use this information, as well as other information that the Adviser and other service providers of the Fund may submit to the Board, to help them
decide whether to renew the Advisory Agreement for an additional year.
Prior to this year’s meeting held on
August 14-15, 2012, the Board, including the Independent Trustees advised by their independent legal counsel, reviewed written materials from the Adviser regarding, among other things: (i) the nature, extent and quality of the services to
be provided by the Adviser; (ii) the investment performance of the Fund and the Adviser; (iii) the costs of the services to be provided and profits to be realized by the Adviser and its affiliates from the relationship with the Fund;
(iv) the extent to which economies of scale would be realized as the Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors, as discussed in further detail below.
At the meeting, representatives from the Adviser, along with other service providers of the Fund, presented additional oral and written
information to help the Board evaluate the Adviser’s fee and other aspects of the Advisory Agreement. Among other things, the representatives provided an overview of the Adviser, including its history, personnel, ownership structure, approach
to risk management, best execution, use of soft dollars and business plan. The Trustees then discussed the written materials that the Board received before the meeting and the Adviser’s oral presentation and any other information that the Board
received at the meeting, and deliberated on the approval of the Advisory Agreement in light of this information.
25
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THE ADVISORS’ INNER CIRCLE FUND II
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GRT VALUE FUND
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JANUARY 31, 2013
|
|
|
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|
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|
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
(Continued) (Unaudited)
|
In its deliberations, the Board considered the factors and reached the conclusions described below relating to
the selection of the Adviser and the re-approval of the Advisory Agreement for the Fund, and did not identify any single piece of information discussed below that was all-important, controlling or determinative of its decision.
Nature, Extent and Quality of Services Provided by the Adviser
In considering the nature, extent and quality of the services currently provided by the Adviser to the Fund, the Board reviewed the portfolio management services provided by the Adviser.
Among other things, the Board considered the quality and continuity of the Adviser’s portfolio management personnel. The most recent investment adviser registration form (“Form ADV”) for the Adviser was provided to the Board, as was
the response of the Adviser to a detailed series of questions which included, among other things, information about the background and experience of the portfolio managers primarily responsible for the day-to-day management of the Fund.
The Trustees also considered other services provided or to be provided to the Fund by the Adviser, such as selecting broker-dealers for
executing portfolio transactions, monitoring adherence to the Fund’s investment restrictions, and monitoring compliance with various Fund policies and procedures and with applicable securities regulations. Based on the factors above, as well as
those discussed below, the Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by the Adviser.
Investment Performance of the Fund
The Board was provided
with information regarding the Fund’s performance since the Advisory Agreement was last renewed, as well as information regarding the Fund’s performance since its inception. The Board also compared the Fund’s performance to its
benchmark index and other similar mutual funds over various periods of time. At the meeting, representatives of the Adviser provided information regarding and led a discussion of factors impacting the performance of the Fund, outlining current
market conditions and explaining expectations and strategies for the future. The Board noted that although the Fund underperformed its benchmark index over recent periods of time, the Fund’s long-term performance was generally favorable to that
of its benchmark index and did not necessitate any significant additional review. Based on this information, the Board concluded that it was satisfied with the investment results the Adviser had been able to achieve for the Fund.
26
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THE ADVISORS’ INNER CIRCLE FUND II
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|
GRT VALUE FUND
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|
|
|
JANUARY 31, 2013
|
|
|
|
|
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APPROVAL OF INVESTMENT ADVISORY AGREEMENT
(Concluded) (Unaudited)
|
Costs of Advisory Services, Profitability and Economies of Scale
In concluding that the advisory fee payable by the Fund was reasonable, the Trustees reviewed, among other things, a report of the costs
of services provided by and the profits realized by the Adviser from its relationship with the Fund and concluded that such profits were not excessive. The Trustees also reviewed reports comparing the expense ratio and advisory fee paid by the Fund
and noted that the Fund’s total fees and expenses, after waivers, were within the range of the average fees and expenses incurred by other peer funds. The Board concluded that the advisory fee was the result of arm’s length negotiations
and appeared reasonable in light of the services rendered. The Board also considered the Adviser’s commitment to managing the Fund and its willingness to continue its expense limitation and fee waiver arrangement with the Fund. In addition, the
Board considered whether economies of scale were realized for the Fund during the current contract period, but did not conclude that such economies of scale had yet been achieved.
Based on the Board’s deliberations and its evaluation of the information described above, the Board, including all of the Independent Trustees, unanimously: (a) concluded that
terms of the Advisory Agreement are fair and reasonable; (b) concluded that the Adviser’s fee is reasonable in light of the services that the Adviser provides to the Fund; and (c) agreed to renew the Advisory Agreement for another
year.
27
GRT Value Fund
P.O. Box 219009
Kansas City, MO 64121-9009
Investment Adviser:
GRT Capital Partners, L.L.C.
One Liberty Square
Floor 11
Boston, MA 02109
Distributor:
SEI Investments Distribution
Co.
One Freedom Valley Drive
Oaks, PA 19456
Administrator:
SEI Investments Global Funds Services One Freedom Valley Drive Oaks, PA 19456
Legal Counsel:
Morgan, Lewis & Bockius LLP
1701 Market
Street
Philadelphia, PA 19103-2921
Independent Registered Public Accounting Firm:
Ernst & Young, LLP 2005 Market Street, Suite 700 Philadelphia, PA 19103
This information must be preceded or accompanied by a current prospectus for the Fund.
GRT-SA-001-0500